Venture capital refers to the equity investment in private enterprises. In a narrow sense (defined by the United States), venture capital funds are funds provided by investors to entrepreneurs or young enterprises in seed stage, early stage and development stage in order to obtain the equity of the target enterprise and finally obtain high returns. In a broad sense (defined in Europe), venture capital funds are all equity funds provided by investors to private enterprises (unlisted enterprises) in order to obtain shares of target enterprises and maximize capital appreciation. Because venture capital mostly invests in young enterprises in emerging industries, and enterprises are in the early stage or development stage, or even the seed stage (or concept stage), these enterprises need to go through a long process of entrepreneurial development from the early stage to the mature stage (usually this process takes 3 -5 years or even 5 years-10 years), so venture capital is long-term. At the same time, because the invested enterprises are private enterprises, the shares obtained by venture capital from these enterprises before listing have almost no circulation market and cannot reflect the value of these shares, so these shares are difficult to transfer or sell, and their liquidity is extremely poor. At the same time, the transfer of these shares is restricted by many non-market factors. Therefore, the main characteristics of venture capital are long investment cycle and poor liquidity. However, once these enterprises are successfully listed or merged several years later, venture capital will get amazing returns (usually 5- 10 times, or even dozens of times). It can be seen that venture capital is a high-risk and high-return investment method, and its purpose is to maximize capital appreciation. Venture capital began in the United States, and its history can be traced back to the 1920s and 1930s. A few wealthy families in the United States have considerable funds, and they hope to maximize their assets through normal investment activities. Because they are worried that inflation will lead to currency depreciation, it is obviously impossible for them to increase their assets by earning interest. They hope to establish and control some emerging enterprises through equity investment. On the other hand, some entrepreneurs (mainly from universities and other research institutions) have good business ideas or ideas, but suffer from lack of funds, so they find these wealthy families and show them their grand blueprints to get financial support. At first, for various reasons, these wealthy families were unwilling to reveal their names, so people called them "angels". At the same time, it is usually necessary to find these angels through personal relationships to obtain angel funds. Because venture capital is a long-term investment and investment decision-making is a complicated process, investors need to have a good understanding of industry and technology, but these wealthy families usually don't know much about industry and technology, so some large wealthy families hire some professionals to make investment decisions for them. In this way, some family venture capital institutions have been formed.

From the 1920s to the 1940s, American venture capital was in its infancy (non-governmental and non-specialized). After World War II, American venture capital entered the embryonic stage. The model of venture capital is slowly taking shape. This model has been quoted to this day. John Whitney Sr., George Doriot and Arthur Rock are outstanding American venture capitalists in the early stage, and they have made great contributions to the establishment, professional operation and industrialization of American venture capital.

Whitney was a captain in the intelligence department of the US Army during World War II. He was captured by the Nazis when he was on a mission in southern France. In 1945, he managed to escape. From 1945 to 1956, he worked as a consultant for special cultural relations and international information services in the State Council, USA. 1956 as the American ambassador to Britain. He made venture capital before World War II. 1946 Whitney invested $5 million to establish the first private venture capital company in the United States-Whitney &; Company), engaged in venture capital activities. Now Whitney is one of the largest venture capital companies in the world. Whitney fully realized that venture capital would play a vital role in the post-war American economic prosperity. At the same time, he believes that the operation of venture capital is a complex systematic project, and venture capital must be operated systematically and professionally. Venture capital companies must hire professional investment experts to manage venture capital, and venture capital should support emerging industries. At the same time, Whitney believes that people must be committed, and a good idea or idea cannot be successful without an excellent entrepreneurial team. He said, "There are only a few good ideas, and there are too few good people." It can be seen that venture capitalists value outstanding entrepreneurial talents far more than a good idea and a good product. Whitney has provided venture capital for more than 350 enterprises (such as Compaq) in her life.

1946, George Doolittle of Harvard University and Ralph E. Flanders of Boston Federal Reserve established the first listed venture capital company in the United States-American R&D Company (ard). Its main purpose is to help those scientists and researchers provide them with venture capital and make them.

Our company's scientific research results will soon be commercialized and go to the market. Doolittle believes that it is not enough for venture capital companies to provide venture capital for entrepreneurs, but also to provide them with a series of help in technology and management. In his view, asset appreciation is only a return, not the ultimate goal. He believes that the ultimate goal or task of venture capitalists is to create innovative entrepreneurs and innovative enterprises. American R&D Company provides venture capital for digital equipment companies.

Arthur Locke is another pioneer of venture capitalists. He is often called "the dean of venture capitalists". He creatively defined the responsibility scope of limited partners and general partners and the sharing of investment income. At the same time, he also believes that venture capital supports not only products, but also outstanding talents with good ideas (especially young engineers). Arthur Locke provides venture capital for companies such as Apple Computer. All their views have become an important part of the current venture capital model in the United States, laying the foundation for the main organizational structure, direction, operation mode and purpose of venture capital in the United States.

In 1950s, at the suggestion of President Eisenhower, the US government passed the Small Business Act on 1953 and established the Small Business Administration (SBA). The function of SBA is to support, help and protect the interests of small enterprises as much as possible, and provide consulting services to small enterprises. SBA directly provides loans to small enterprises, and guarantees to banks for small enterprises, so that small enterprises can obtain loans from banks, and at the same time, it provides help and training for small enterprises to obtain government purchase orders and management and technology. Since the opening of 1953, SBA has provided direct and indirect assistance to12.8 million small businesses. At present, the total amount of loans granted by SBA to small businesses is $25 billion. 1958, the Investment Law was passed and the Small Business Investment Company (SBIC) plan was established. With the permission of SBA, SBIC can be a private venture capital company, which can provide long-term loans for small enterprises and make equity investment in high-risk small enterprises by enjoying preferential policies from the government. Now SBIC has become an important member of the American venture capital company family.

From the late 1970s to the early 1990s, American venture capital entered a period of development. At the end of 1970s, most Americans realized that venture capital was a new industry and an important power source for American economic development. The U.S. government also acted quickly and formulated a series of preferential tax policies and encouraging laws that are beneficial to venture capital investment, among which the most important bills are: Tax on Reduction of Capital Gains (TCGRA), Employee Retirement Income Protection Act (ERISA), Small Business Investment Incentive Act (SBⅱA IIA) and Employee Retirement Income Protection Plan Act (ERISA Plan Assets). The Law on the Protection of Employees' Retirement Income allows pensions to enter venture capital and make other high-risk investments for the first time, thus legally confirming that pensions can participate in venture capital. The Small Business Investment Incentive Act and the Employee Retirement Income Protection Asset Plan Act greatly simplify the operation of venture capital, and legally stipulate that pension institutions can become limited partners of venture capital companies. Therefore, venture capital companies can establish venture capital limited partnerships more easily, quickly and effectively, and make venture capital easier, faster and more effective in emerging enterprises.

At the end of 1990s, the progress of information technology, especially the appearance of Internet, brought great vitality to American venture capital industry. Since then, American venture capital has entered a period of rapid development. The venture capital invested in the United States has rapidly increased from $4 billion in 1983 to $30 billion in 1986 (7.5 times that of 1983), and the venture capital invested in 1989 has reached $35.6 billion (that of 1983) In 2000, a survey in 1996 showed that only $65,438 billion (3% of the total venture capital) was invested in early-stage enterprises. However, with the progress of information technology, especially the application of Internet, this investment model is changing rapidly. According to the report of PricewaterhouseCoopers, since 1998, 4 1% of venture capital has entered the initial stage (also known as the concept stage or seed stage) and early-stage enterprises, accounting for 50% of the total number of venture enterprises (enterprises supported by venture capital) in that year. Venture capital has brought great influence to American economy, which can be said to be the "combustion improver" of American economic vitality and the "engine" of economic development. Venture capital has created countless new employment opportunities. For example, in the mid-1950s, Silicon Valley in the United States was still a remote rural area with only about 654.38 million+farmers. With some enterprises supported by venture capital (such as Intel) coming here to settle down, by the mid-1960s, the number of employees in Silicon Valley had increased to more than 270,000. By 1984, the number of employed people reached 750,000, and 40,000 new jobs were created every year. According to Cooper &; Ly brand's research shows that from 1992 to 1996, enterprises supported by venture capital increase their employees by 40% every year, while large companies lay off 2.5% every year. At the same time, venture capital accelerates product innovation, thus greatly improving productivity, improving export trade and reducing trade deficit. Venture capital has created thousands of giant enterprises (such as Microsoft, Intel, Cisco, Yahoo and so on). ) and created a very dynamic economy in the United States. Chart 1 briefly summarizes the development stages of venture capital in the United States.

At present, it is estimated that there are about 5,000 venture capital companies in the United States, and the amount of venture capital in 2000 reached $68.8 billion, ranking first in the world, accounting for about 72% of the global venture capital market. Venture capital in western Europe also started earlier, mainly in Britain, France and Germany, but its development speed is far less than that of the United States, and now it ranks second, accounting for about 20%. At present, with the economic globalization, many American venture capital companies have started transnational venture capital. After Israel, the Asia-Pacific region has increasingly become their investment focus. Governments around the world are increasingly aware of the importance of venture capital to the development of national economy. Among them, Israel, India, Singapore, South Korea and so on. For example, according to the report of the Economic Development Board of Singapore (EDB), by the end of 1999, Singapore had established more than10 billion USD of venture capital. Venture capital in China started in the mid-1980s, almost at the same time as that in Singapore. However, due to the lack of venture capital sources, effective exit channels, professional venture capital managers and specialized operations, and the lack of corresponding policies and regulations to encourage venture capital, it has been developing slowly in the 1980s. In the 1990s, there was an obvious development trend. At present, there are about 100 venture capital companies in China, and about 40 foreign venture capital companies have entered the China market. However, China's venture capital industry still needs to be tilted and established as soon as possible, so as to make it develop rapidly and healthily.